TREASURY

ECOFIN

Ian Pearson: The ECOFIN Council met informally in Nice on 12 September, and again formally in Luxembourg on 7 October 2008. The Chancellor of the Exchequer attended both meetings for the UK. The following items were discussed:
	Preparation of the European Council on 15-16 October
	(i) Economic situation, including EMU@10
	Following an informal discussion at the ECOFIN meeting in Nice, Ministers agreed a set of Council conclusions on the current economic situation in the EU. The text covers the shocks caused to the European economy by financial instability and the rise in commodity prices, and appropriate responses. The UK welcomes these conclusions, which stress the need to continue with economic reform in Europe, and call on the European Investment Bank to provide greater funding to SMEs.
	(ii) Situation of the financial markets and European supervision
	In addition to the discussion outlined above, Ministers held a follow-up discussion to the informal ECOFIN on the causes and possible policy responses to ongoing financial turbulence. ECOFIN agreed a set of conclusions which complement the short-term actions agreed, and which will form the basis of discussions by Heads of State and Government.
	(iii) Volatility of oil and raw material prices: political response
	As requested by Heads of State and Government at the European Council in June, Ministers discussed developments in oil prices and possible measures to be taken in response on the basis of work prepared by the European Commission and the presidency. The UK welcomes measures to facilitate transparency in oil markets, including greater producer-consumer dialogue, and to promote energy efficiency as longer-term measures to improve market functioning.
	Other items discussed at the 7 October meeting
	(i) Immediate responses to the financial turmoil
	Due to developments in financial markets, ECOFIN Ministers devoted a significant amount of their time to developing a co-ordinated set of principles to guide actions. The principles, which the UK fully supports, stress that member states should:
	Ensure that any interventions are to be timely, with the support being, in principle, temporary;
	Be watchful regarding taxpayers' interests;
	Protect the legitimate interests of competitors by having regard to state aid and competition rules;
	Avoid possible negative spill-over effects.
	(ii) Financial services: draft directive on the solvency of insurance undertakings (Solvency II)
	Finance Ministers discussed the draft Solvency II directive, which will set prudential requirements for insurance and reinsurance companies. Discussion focused particularly on prudential capital requirements and supervision of cross-border insurance groups. The UK supports work that will ensure more effective supervision of pan-European insurance groups, and which will ensure a sufficient prudential framework. The issue will be returned to at the next meeting of the ECOFIN Council in November.
	(iii) Taxation: combating VAT fraud
	Ministers agreed the outline of an improved system of targeted information exchange to combat VAT fraud.
	(iv) Reduced VAT rates
	Following a discussion over breakfast at the informal ECOFIN, Ministers will held an exchange of views on the principles underlying the application of reduced rates of VAT across the EU, with the European Commission presenting analysis designed to facilitate the discussion. The UK believes that member states should be allowed flexibility in applying reduced rates of VAT as long as they do not have detrimental effects on the single market. ECOFIN will return to this issue at its meeting in November.

HOME DEPARTMENT

G6 and United States Counter-Terrorism Symposium

Jacqui Smith: The informal G6 group of Interior Ministers from France, Germany, Spain, Italy, Poland and the United Kingdom met in Bonn, Germany on 26 and 27 September 2008, along with the United States State Secretary of the Department of Homeland Security. This was the third G6 plus US counter-terrorism symposium meeting (previous meetings took place in Venice in May 2007 and Schwielowsee in November to December 2007). I attended on behalf of the United Kingdom.
	The symposium was divided into four substantive discussion sessions:
	general aspects of counter-terrorism (prevention, countering radicalisation, criminal law and law on threat prevention);
	remote searches of computer hard drives;
	diplomatic assurances; and
	right to self-defence.
	The discussions underlined the importance of transatlantic co-operation on counter-terrorism. We reflected on developments in the field of international terrorism, continued our exchanges on the development of effective countermeasures and recognised that it was important to be able to respond effectively to new challenges.
	The symposium emphasised that all state responses to the threat of terrorism must fully respect the international legal framework on the protection of human rights and the rule of law.
	Conclusions on the topics above were agreed and then presented at a press conference at the end of the symposium.
	It was agreed that the G6 plus US CT symposium was a useful forum which should continue to meet (dates for future meetings have not been confirmed).

JUSTICE

Anti-Corruption Champion

Jack Straw: Having been appointed as the Government's Anti-Corruption Champion this week, I am writing to inform the House of progress made in our anti-corruption efforts.
	For two years, the Government have undertaken a concerted programme of action to co-ordinate and to improve our anti-corruption systems through annual anti-corruption action plans driven forward by my predecessors, my right hon. Friends the Members for Barrow and Furness (John Hutton) and for Leeds, Central (Hilary Benn). The role of Anti-Corruption Champion is a personal appointment by the Prime Minister and the secretariat and support functions remain within BERR.
	Government investment in dedicated police resources has led to a dramatic increase in the number of investigations into allegations of foreign bribery by UK nationals and companies, up from four investigations in 2006 to over twenty live cases this year. Investigations are feeding through into prosecutions and convictions of wrongdoers.
	We will make further significant progress in the next few months on the reform of the law on bribery. The Law Commission is expected to report in November on the full range of structural options. As announced in the draft legislative programme, we propose to publish a draft bill in the next session of Parliament, which will be informed by the Law Commission's review.
	This week the working group on bribery at the Organisation for Economic Co-operation and Development (OECD) will publish a report on the UK's progress against its recommendations. We have written to the OECD about our plans to develop a comprehensive UK strategy for tackling foreign bribery. This strategy will build on the solid foundation we have established for combating foreign bribery and strengthen our work with international partners, establishing a clear legal, regulatory and policy framework.
	A copy of our note to the OECD will be placed in the Libraries of both Houses.

TRANSPORT

Post-Gallagher Update

Jim Fitzpatrick: My noble Friend the Minister of State for the Department for Transport, Lord Adonis, has made the following ministerial statement:
	I have today published a consultation on slowing down the rate of increase of the Renewable Transport Fuel Obligation (RTFO) to 0.5 per cent. per annum, taking the level to 5 per cent. in 2013-14 rather than in 2010-11 as currently provided for in legislation.
	This consultation fulfils a commitment made by Government in an oral statement by the then Secretary of State for Transport, my right hon. Friend the Member for Bolton, West (Ruth Kelly) on 7 July, where she emphasised that UK policy on biofuels will aim to ensure development of a sustainable biofuels industry.
	Amid growing concerns about the potential indirect impacts of biofuels on food supplies and prices, on deforestation and on greenhouse gas emissions, the Government commissioned Professor Ed Gallagher, chair of the Renewable Fuels Agency, to lead a review of the latest evidence on biofuels. The review concluded that the Government should "amend but not abandon" its biofuel policy. The review also stated that "by 2020 biofuels have the potential to deliver greenhouse gas savings of 338 to 371 million tonnes of carbon dioxide" and that there is a "strong need for further evidence and monitoring to determine the sustainability and wider impacts of biofuels". In short, the review concluded that there was a future for biofuels, but that Government should adopt a cautious approach until the wider environmental and social impacts of biofuels could be understood.
	The Government agree with the recommendations of the Gallagher review.
	As well as consulting on slowing down the rate of increase of the RTFO, we will also be consulting on the addition of two new eligible fuels under the scheme. We have asked for responses by 17 December.
	In addition we continue to support the EU target of 10 per cent. renewable transport fuels by 2020, but will continue to argue that this target be subject to clear conditions, that the EU-level sustainability criteria address indirect, as well as direct, effects of biofuels and that the target is subject to rigorous review in light of the emerging evidence on the wider, indirect impacts of biofuels.
	We are also continuing to engage with international partners and the scientific community to better understand how to define a good sustainable biofuel, and are committed to ensuring that this gathering of evidence on the indirect impacts of biofuels is fed into the ongoing debate across Europe and globally on how to encourage production of sustainable biofuels.
	I can also announce that the Department anticipates contributing up to £3 million per year over the next two financial years to the Carbon Trust's Advanced Bioenergy Directed Research Accelerator. This funding is subject to the initiative attracting high-quality bids that can be progressed to contract, as well as the approval of the Carbon Trust's investment committee to proceed at each stage of the initiative. It will allow the Carbon Trust to further increase the materiality and impact of its advanced bioenergy research and development activities.
	Copies of the consultation have been placed in the Library of the House and are available in the Vote Office and the Printed Paper Office.